Payday loan companies appear to be in breach of regulations

Payday loan companies appear to be in breach of regulations by offering money to pay for Christmas parties and by deliberately targeting state benefit claimants.

Websites have sprung up in recent weeks offering payday loans to help pay for Christmas shopping and celebrations, including several explicitly aimed at people on benefits.

The sites are separate from the loan companies, but applicants are redirected from the sites to well-known payday lenders.

Christmas spirit: Websites have sprung up in recent weeks offering payday loans to help pay for Christmas shopping and celebrations

Office of Fair Trading guidelines prohibit loan firms from ‘targeting or exploiting borrowers who may be particularly vulnerable by virtue of their current indebtedness or poor credit history’.

One such site, called paydayloans forpeopleonbenefits24h7.co.uk, offers loans to those with a bad credit history including arrears, defaults and late payments, and those who are bankrupt or the subject of County Court Judgments.

Written in poor English, the site redirects customers to mainstream firms including Wage Day Advance and Swift Sterling. It was registered last month by Adam Zulewski, who appears to be Polish but describes himself as a ‘UK individual’.

Wage Day Advance, in Skipton, North Yorkshire, is one of the fastest-growing payday loan firms. Last year it doubled in size with sales of £34 million and £16 million in profit.

Swift Sterling is a subsidiary of Northway Broker, which has an office on the Isle of Man and headquarters in Malta. Both are tax havens. Wage Day Advance said the site was run by a separate business that provided it with customers.

A spokesman said: ‘We are to cease all trading through this website immediately due to its customer targeting approach and its non-compliance with the Consumer Credit Act 1974, the Consumer Credit Regulations, the Data Protection Act 1998, Privacy Electronic Communications Regulations and OFT guidance.’

He added that Wage Day Advance ‘will not be reactivating this account at any point’ as the site is ‘targeting financially vulnerable people’.

Financial Mail has also discovered websites advertising loans to pay for Christmas shopping in a potential breach of advertising codes. Firms are restricted from advertising loans in a manner that ‘trivialises the decision’ to take out a loan.

Ukpaydayloans4u.blog.co.uk – which appears to have been removed from the internet since we began investigations – suggested taking a loan to throw a Christmas party and ‘make the celebration even bigger’.

The site, which included a link to QuickQuid, encouraged people to complete an online application form and then redirected them to firms including Swift Sterling. QuickQuid said it had ‘no ties’ to the site.

Financial Mail has reported the site to the Advertising Standards Authority along with several others including christmascashloans.co.uk and christmascashloansfast.co.uk.

The ASA is considering Financial Mail’s complaints relating to seven websites. The information has also been passed to the OFT.

The OFT is expected to issue a compliance report this week on the pay day loan market.

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